To save money, reconsider these ripe
outsourcing opportunities you may have never (or were afraid to) put on the
table
By John Edwards for InfoWorld
April 29, 2009
In a sliding market, outsourcing looks increasingly
attractive. In this era of drastic cost cutting and budget squeezing, many IT
managers facing diminished budgets and frozen in-house resources are exploring
ways of sending even more work off site to save money, or at least take capital
costs of their immediate plate.
But with traditional outsourcing opportunities all
but played out, many enterprises are asking, "Is there anything left to
outsource?"
[ Sometimes, outsourcing can cause more harm
than good. Check out the worst cases in "Painful
lessons from IT outsourcing gone bad." | InfoWorld's Ephraim Schwartz
explains the slippery
slope of outsourcing dependency. ]
Four critical IT tasks -- project management,
e-discovery, regulatory compliance, and environmental activities -- are all
ripe for outsourcing. But today, they are generally not outsourced because
managers don't think they can send the work off site due to cost, security, and
other concerns. It's time to rethink the anxieties in these four areas.
Outsourcing opportunity No. 1: Project
management
Project management involves organizing and balancing three basic elements:
people, time, and money. Many IT shops would like to unload the nuts and bolts
of IT project management onto an outside provider, but worry that the task is
simply too big, too complex, and perhaps even too important to outsource. Managers
also fret about losing the precise control and oversight successful project
management requires, as well as the ability to turn on a dime if circumstances
demand a sudden change in tactics.
[ Projectmanagement is an increasingly key skill
for IT. Find out the others in InfoWorld's "Where
IT jobs are headed" slideshow. | Get sage IT career advice from Bob Lewis' Advice Line
blog. ]
Beth Anderson, IT supervisor for Santa Fe Natural
Tobacco Co., a specialty tobacco and cigarette manufacturer, overcame her
reluctance to outsourcing project management after discussing her reservations
with SMBology, a firm that handles project management. After some discussions,
the partners decided on a staged approach. "We've given them some
technical project management responsibility for a couple of major
projects," she says. "So it is significant ... but it's not like
we've outsourced all project management." A current project aims to add
mobility functionality to a Microsoft Dynamics CRM platform.
Regardless of an outsourcing project's scale or
scope, Anderson believes that it's vital for the provider to maintain a
physical connection with its client. "[SMBology] is physically here to
gather requirements and ... when we're doing user testing, so we've got real
quick communications," she notes. "If the user sees something that's
not working the way they want it to, then the people are here to fix it."
Justin Singer, SMBology's president, says that many
IT shops are reluctant to embrace project management outsourcing because they
were soured by previous on-site project management experiences. "They may
not have experience with what a really good project can look like," he
explains. "It's hard for them to really see what the benefits are going to
be."
Andersonsays outsourcing benefits have generally
met her expectations. "You get elastic access to talent, and you get
specialized skills that you don't have a need for 365 days a year on your own
internal team," she says. "So you can ramp up and stretch the elastic
when you need the resources, and then you can snap it back when you no longer
need them."
Outsourcing opportunity No. 2: Electronic
discovery
Over the years, e-discovery (sifting through data pertaining to criminal or
civil legal cases) has grown into a burdensome task for IT shops working inside
law firms or enterprises with corporate legal departments. It would be nice if
some or all the responsibility for storing and managing theses important
documents could be offloaded onto an outside service provider. Yet IT managers
often feel that privacy and security issues, as well as user access
limitations, make the effective outsourcing of e-discovery material difficult,
if not impossible.
[ Findout the mistakes that can kill you in
Ephraim Schwartz's "The
art of e-discovery." ]
But Seth Row, an associate at law firm Holland
& Knight, sees it differently. "There are some things I wish we could
do more of in-house, but given the current realities, it's not possible,"
he says. That's why, like a growing number of IT shops in a similar situation,
Holland & Knight is outsourcing much of its e-discovery work. "It's
good to have options," Row says. "You need to be prepared for lots of
different contingencies, so developing relationships with vendors is very
important -- it's important that they're there as a resource."
Row notes that a growing number of legal cases
focus on e-mail evidence. "E-mail is usually the largest volume of
electronic data that you're dealing with in a lawsuit, particularly in an
employment-related lawsuit," Row observes. But Row notes that it's
virtually impossible to search e-mail effectively in its native client
environment. "That doesn't work very well, so it's got to be processed
into a database before you can search it across the different fields," he
explains. "It's got to get processed so that I can search all the e-mails
and all the associated attachments that contain a particular word, or a
particular concept."
Although an IT shop could tie up its servers running
lengthy databases searches, and then organize and store vast amounts of e-mails
and documents, it's often more cost effective to outsource e-discovery
projects. Holland & Knight uses the eClaris e-discovery consultancy to
handle much of its work. "eClaris has the capability of setting up the
database for me, and I would then access it through the Internet," Row
says. "So I go to a Web site -- it's password protected -- I log in, and
then I can review [the data] through this Web-based system."
While the Web interface addresses IT managers' user
access concerns, what about privacy and security issues? Education is the key
to calming managers' fears, says Jacques Nack Ngue, eClaris' CEO. "One
effort we do is engaging companies, and just providing as much information as
possible about the e-discovery process," Nack Ngue says, such as
"what the risks are, how to assess them, and how to handle and manage
those risks."
Row agrees that once a manager begins working with
an outsourcer and understands what needs to be done to maintain security and
privacy, the risks suddenly appear much smaller. "It's a collaborative
process," he says.
Outsourcing opportunity No. 3: Regulatory
compliance
The financial scandals of the late 1990s and early 2000s led to several new
federal compliance mandates, most notably the Sarbanes-Oxley law.
These mandates, as well as an array of other state, local, and industry-based
compliance measures such as California's privacy
breach notification statute and the payment industry's PCI
standard, created new record-keeping, document-tracking, and other demands
on IT shops that tend to sap productivity and slow other critical work.
[ Thefinancial meltdown will likely increase
the regulation burden on IT, argues InfoWorld's Ephraim Schwartz. ]
Despite the added IT burden, many enterprises have
been reluctant to outsource regulatory compliance tasks, believing that the
work is too business-critical to place into the hands of an outsider. Many
managers also worry about the security and legal implications of sending such
work off-site.
Michael Rasmussen, president of the regulatory
compliance advisory Corporate Integrity, says the key to successful outsourcing
lies in finding the organization that knows the most about the relevant type of
regulatory compliance needs. "There are FDA regulations, different
elements of privacy regulations, and disaster recovery and continuity
regulations, and each of these requires something different," he says.
Christine Applegate, CFO of East Coast Cable &
Communications, a firm that provides installation services for area cable
companies, got drawn into the regulatory tangle when Massachusetts enacted a
customer privacy law. Not having anyone on staff with the skills or experience
needed to ensure that the company was living up to its compliance obligations,
she turned to East Coast's primary IT service provider -- Boston-based Vitale
Caturano & Co. -- to develop a solution.
Applegate says her initial concerns about handing
over regulatory compliance work to an outside entity turned out to be mostly
unfounded. By working closely with Vitale Caturano, she could define a strategy
that would allow East Coast to comply with the new regulations while
safeguarding customer privacy. "We probably would follow the same path if
starting over again," she says. "We did not understand the depth of
our needs."
Outsourcing opportunity No. 4: Environmental
activities
Even as budgets are slashed, many IT shops are feeling increasing pressure
to pursue "green" business practices. Outsourcing is a potentially
cost-saving way to offload ongoing eco-tasks -- such as environmental audits
and hardware disposal -- that lie outside of an IT shop's core competency. Yet
many managers are reluctant to pull the trigger on environmental outsourcing,
believing that the concept is too amorphous to outsource or because they are
skeptical of green issues in general.
Bob Brand has a different view, however. Vice
president of corporate security at media giant Cox Enterprises, Brand sees one
facet of green outsourcing -- hardware
disposal -- as both a potential money-saver and as a way of enhancing IT
security.
[ Learnhow to green your technology in Ted Samson's
Sustainable IT blog. ]
From Brand's viewpoint, routine hardware disposal
risks exposing enterprise secrets to recyclers and other unknown parties. By
handing the work over to an outside firm -- Redemtech, in his case -- Brand
believes that Cox is relieving IT of a time-consuming task, deriving the maximum
value out of its IT hardware assets, and guaranteeing that enterprise data is
protected as it enters the recycling process. "With Redemtech we will
extend the life of computing equipment while ensuring responsible recycling at
the end of life and provide secure treatment of customer and company data,
which will measurably contribute to this goal," he says.
"In a widely distributed company, [green]
outsourcing offers a straightforward means for centralizing, thus simplifying
and controlling fragmented practices that represent real inefficiency and
risk," says Robert Houghton, Redemtech's president. "Because
environmental and privacy laws are proliferating at the state and local levels,
a specialist in the field is often better able to protect a company’s interests
in such arcane matters than the organization’s own employees, who may lack the
essential in-depth knowledge."
Brand notes that Cox's green outsourcing initiative
didn't come without effort. "It took us about six months to develop our
strategy," he says. "Progress is going well. However, it could be
several years before we're able to fully implement our plans across our
operating businesses, which are largely decentralized and include nearly 78,000
employees worldwide."
Yet Brand believes that his company made the right
decision. "The icing on the cake is realizing the return on your
investment that leads to environmental and economic sustainability," he
says.